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RealPage, Landlords Face Antitrust Lawsuit Over Rent Spike (3)

Oct. 19, 2022, 5:19 PMUpdated: Oct. 19, 2022, 10:15 PM

RealPage Inc. and major residential landlords are facing federal antitrust litigation in San Diego after a group of renters hit them with a proposed class action Wednesday claiming they’ve conspired to inflate the cost of apartment leases nationwide.

In addition to RealPage, a Thoma Bravo LP affiliate, the lawsuit targets the two top US residential real estate managers, GreyStar Real Estate Partners LLC and Lincoln Property Co., as well as the fifth, FPI Management Inc. The other six landlords named as defendants include four of the country’s 25 largest.

The suit accuses the landlords of illegally sharing price information through data analytics software made by RealPage rather than competing to attract renters. The software, based on algorithmic pricing mechanisms, allegedly includes other functions that let members of the cartel police one another.

“RealPage has undertaken this conduct with full and complete knowledge of its illegality,” declaring that it’s “proud of its role in the exploding increase in the prices of residential leases,” the suit says. It cites a marketing video in which a company executive allegedly took credit for the unprecedented spike.

A representative for RealPage told Bloomberg Law in a brief statement late Wednesday that the company will “vigorously defend” itself in court.

“RealPage strongly denies the allegations,” the statement said. “Beyond that, we do not comment on pending litigation.”

The real estate managers didn’t immediately respond to requests for comment Wednesday.

RealPage isn’t the only company that has bragged about its role in relentlessly driving up rents, according to the complaint. The landlords, too, “have publicly admitted that RealPage has allowed them to maintain higher prices in concert, with confidence that they can avoid price cutting and the prisoner’s dilemma,” the suit says.

The complaint, filed in the US District Court for the Southern District of California, comes days after the news organization ProPublica published an investigative report on RealPage’s software and its use by major real estate managers.

The suit lists roughly a half-dozen features of the residential apartment market that allegedly make it susceptible to collusion, including the high cost of acquiring a building, barriers that prevent renters from breaking their leases, the lack of other options, the concentrated nature of the industry, and the “ample opportunities to collude” among landlords.

The other real estate managers named as defendants are Mid-America Apartment Communities Inc., Avenue5 Residential LLC, Equity Residential, Essex Property Trust Inc., Thrive Communities Management LLC, and Security Properties Inc.

Cause of Action: Section 1 of the Sherman Act.

Relief: Treble damages, an injunction, costs, fees, and interest.

Potential Class Size: Anyone in the US who has paid rent to a landlord using RealPage’s software since Oct. 18, 2018.

Attorneys: The renters are represented by Berger Montague PC, Justice Catalyst Law, Hausfeld LLP, Lieff Cabraser Heimann & Bernstein LLP, and Hartley LLP.

The case is Bason v. RealPage Inc., S.D. Cal., No. 22-cv-1611, complaint filed 10/19/22.

(Updates with RealPage response in paragraphs five and six.)

To contact the reporter on this story: Mike Leonard in Washington at mleonard@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Maya Earls at mearls@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com